The untold story behind the government’s decision to ban
Huawei
from its national broadband network long before the information was publicised and the “top secret" evidence upon which this was based has more twists and turns than a Russian matryoshka doll.

This week The Australian Financial Review exclusively reported that, after receiving updated briefings from intelligence agencies, the Coalition government has not budged from its predecessor’s decision to exclude Huawei from the NBN. The Financial Review understands Prime Minister
Tony Abbott
holds very clear views on Huawei and there is presently little prospect of a policy change.

Yet there are grounds to publicly debate the decision to ban the world’s largest telecommunications equipment provider and an ostensibly harmonious partner in Britain’s broadband network.

The first obvious point is the national security agencies are not beyond reproach and should be subject to invasive and fearless scrutiny. The arguably easier bureaucratic reflex for agencies is to follow the United States’ lead and lumber politicians with unacceptably high risk assessments. That is, to make any decision to embrace Huawei impossibly hazardous.

A second question is whether the national security veto could have been exercised in a more competitively neutral manner. It is not ideal having the NBN primarily reliant on one telco partner,
Alcatel-Lucent
.

The rollout and ongoing maintenance of the network would benefit from as much competitive tension between rival corporations as possible. Exclusively awarding Alcatel-Lucent the NBN work undermines these benefits.

This stimulates a third insight. One would hope that all Australian governments have gone through a very careful cost-benefit analysis of the risks of involving Huawei in various layers of the NBN. A puzzle remains in the “outer access layer", which denotes the link between households’ modems and the local area nodes (like old phone exchanges).

Still a chance for Huawei

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Some intelligence experts claim that having Huawei supply its world class and cheap equipment to households and local area nodes, and harnessing its ultra-fast “vectoring" technology, would expose Australia to “manageable" risks.

This is distinct from Huawei furnishing equipment in more sensitive areas, such as the larger aggregation nodes known as “points of access" or the NBN’s monitoring and control systems.

Significantly, Huawei already supplies equipment to Britain’s outer access layer, and to other networks around the world.

What is perhaps more bewildering is the company claims it only ever tendered for work in the outer access layer of the NBN, recognising it would not be welcome in more sensitive parts of the network.

So this begs the question: is there still a role for Huawei to play in the NBN’s perimeter, which just happens to be the largest and most lucrative commercial sub-market?

A final observation is that there is no doubt the espionage claims against Huawei are hypocritical in the sense that all Western telecommunications firms assist intelligence agencies to spy on their foreign targets.

Thanks to Edward Snowden’s leaks, which the former boss of the National Security Agency told the Financial Review are the most destructive in US history, we know the US National Security Agency has a “key corporate partner" that gives it “access to international cables, routers and switches". That sounds staggeringly similar to the US equivalent of the Huawei threat, and, in all likelihood, refers to Cisco and/or Verizon.

We thus face a world where sensitive telecommunications infrastructure is becoming increasingly nationalised and suppliers treated like weapons purveyors, which is not an unreasonable assumption to make in any prudent risk analysis.

Set against this is the secular trend towards cheaper and more innovative global supply chains in the production of telco products. Trading off national security needs against economic efficiency gains is a complex exercise that should be regularly revisited.